Hostname: page-component-78c5997874-ndw9j Total loading time: 0 Render date: 2024-11-15T09:24:18.872Z Has data issue: false hasContentIssue false
  • English
  • Français

Profitability of organic and conventional soybean production under ‘green payments’ in carbon offset programs

Published online by Cambridge University Press:  07 November 2011

Ariel Singerman ,
Kathleen Delate ,
Craig Chase ,
Catherine Greene ,
Michael Livingston ,
Sergio Lence  and
Chad Hart
Ariel Singerman
Affiliation:
Department of Economics, Iowa State University, Ames, IA, USA
Kathleen Delate*
Affiliation:
Departments of Agronomy and Horticulture, Iowa State University, Ames, IA, USA
Craig Chase
Affiliation:
Leopold Center for Sustainable Agriculture, Iowa State University, Ames, IA, USA
Catherine Greene
Affiliation:
USDA-ERS, Washington, DC, USA
Michael Livingston
Affiliation:
USDA-ERS, Washington, DC, USA
Sergio Lence
Affiliation:
Department of Economics, Iowa State University, Ames, IA, USA
Chad Hart
Affiliation:
Department of Economics, Iowa State University, Ames, IA, USA
*
*Corresponding author: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Emphasis on reducing emissions from the greenhouse gases (GHG), carbon dioxide (CO2), nitrous oxide (N2O) and methane (CH4) has increased in recent years in the USA, primarily for industry, transportation, energy and agricultural sectors. In this study, we utilized on-farm data collected by the USDA-National Agricultural Statistics Service (NASS) Agricultural Resource Management Survey (ARMS), secured under an agreement with the USDA-Economic Research Service (ERS) to analyze the profitability of organic and conventional soybean production, based on changes that ‘green payments’ in a cap-and-trade system would introduce in agricultural markets in the USA. In particular, the analysis focused on establishing whether organic producers would be better positioned to sequester carbon (C) and reap the benefits of the C-offset scheme compared to conventional producers, given the differences in costs, management practices and environmental benefits between organic and conventional production methods. We estimated several changes in profitability of soybean producers according to management practices, incentives for the generation of offset credits, and increase in energy input prices that a potential cap-and-trade system may introduce in future agricultural markets in the USA. Survey data suggested that even with lower yields, conventional producers could profit from converting to organic agriculture, given organic price premiums. In addition, taking into consideration both direct and indirect costs, average cost for conventional-till (CT) organic soybean production was approximately 9% lower than no-till (NT) conventional production. With a C market and payments for soil C sequestration through potential Clean Energy legislation, additional profit could be accrued by organic producers, because organic production would have 28% greater ton CO2 eq. acre−1 yr−1 sequestration than conventional NT. Thus, the environmental benefits from GHG reduction could incentivize increased conversion from conventional to organic production across the USA.

Keywords

organiccarbon sequestrationsurveycost of production
Type
Research Papers
Information
Renewable Agriculture and Food Systems , Volume 27 , Issue 4 , December 2012 , pp. 266 - 277
Copyright
Copyright © Cambridge University Press 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1Environmental Protection Agency (EPA). 2009. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2007. EPA, Washington, DC. Available at Web site http://www.epa.gov/climatechange/emissions/downloads09/ExecutiveSummary.pdf (verified August 5, 2011).Google Scholar
2Babcock, B. 2009. Costs and Benefits to Agriculture from Climate Change Policy. Iowa Ag Review, Summer 2009, Vol. 15, No. 3. Available at Web site http://www.card.iastate.edu/iowa_ag_review/summer_09/article1.aspx (verified August 5, 2011).Google Scholar
3Ziesemer, J. 2007. Energy Use in Organic Food Systems. Natural Resources Management and Environment Department, Food and Agriculture Organization of the United Nations, Rome, Italy.Google Scholar
4Kotschi, J. and Müller-Sämann, K. 2004. The Role of Organic Agriculture in Mitigating Climate Change – a Scoping Study. IFOAM, Bonn, Germany.Google Scholar
5Mäder, P., Fliessbach, A., Dubois, D., Gunst, L., Fried, P., and Niggli, U. 2002. Soil fertility and biodiversity in organic farming. Science 296:1694–1697.Google Scholar
6Pimentel, D. 2006. Impacts of Organic Farming on the Efficiency of Energy Use in Agriculture. An Organic Center State of Science Review. Organic Center, Greenfield, MA. Available at Web site http://www.organic-center.org/reportfiles/ENERGY_SSR.pdf (verified August 5, 2011).Google Scholar
7LaSalle, T.J. and Hepperly, P. 2008. Regenerative Organic Farming: A Solution to Global Warming. Rodale Institute, Kutztown, PA. Available at Web site http://www.rodaleinstitute.org/files/Rodale_Research_Paper-07_30_08.pdf (verified August 5, 2011).Google Scholar
8Rodale Institute. 2003. Organic Agriculture Yields New Weapon Against Global Warming: Groundbreaking Study Proves Organic Farming Counters Greenhouse Gases. Rodale Institute, Kutztown, PA. Available at Web site http://www.strauscom.com/rodale-release/ (verified August 5, 2011).Google Scholar
9Greene, C., Dimitri, C., Lin, B.-H., McBride, W., Oberholtzer, L., and Smith, T. 2009. Emerging Issues in the U.S. Organic Industry. Economic Information Bulletin Number 55. Economic Research Service, USDA-ERS, Washington, DC.Google Scholar
10Lal, R. 2004. Soil carbon sequestration to mitigate climate change. Geoderma 123:1–22.CrossRefGoogle Scholar
11Sandretto, C. and Payne, J. 2006. Agricultural Resources and Environmental Indicators. EIB-16. USDA-ERS, Washington, DC.Google Scholar
12Lal, R. 1999. The potential of world cropland soils to sequester carbon and mitigate the greenhouse effect. Environmental Science and Policy 2:177–185.CrossRefGoogle Scholar
13Baker, J.M., Ochsner, T.E., Venterea, R.T., and Griffis, T.J. 2007. Tillage and soil carbon sequestration – What do we really know? Agriculture, Ecosystems and Environment 118:1–5.Google Scholar
14Intergovernmental Panel on Climate Change (IPCC). 2006. IPCC Guidelines for National Greenhouse Gas Inventories. IPCC, Geneva, Switzerland.Google Scholar
15West, T.O. and Marland, G. 2002. Net carbon flux from agricultural ecosystems: Methodology for full carbon cycle analyses. Environmental Pollution 116:439–444.Google Scholar
16Marriott, E.E. and Wander, M.M. 2006. Total and labile soil organic matter in organic and conventional farming systems. Soil Science Society of America Journal 70:950–959.Google Scholar
17West, T.O. and Post, W.M. 2002. Soil organic carbon sequestration rates by tillage and crop rotation: A global data analysis. Soil Science Society of America Journal 66:1930–1946.CrossRefGoogle Scholar
18Robertson, G.P., Paul, E.A., and Harwood, R.R. 2000. Greenhouse gases in intensive agriculture: Contributions of individual gases to the radiative forcing of the atmosphere. Science 289:1922–1925.Google Scholar
19Blanco-Canqui, H. and Lal, R. 2008. No-tillage and soil-profile carbon sequestration: An on-farm assessment. Soil Science Society of America Journal 72:693–70.Google Scholar
20Poirier, V., Angers, D.A., Rochette, P., Chantigny, M.H., and Ziadi, N. 2009. Interactive effects of tillage and mineral fertilization on soil carbon profiles. Soil Science Society of America Journal 73:255–26.Google Scholar
21Teasdale, J.R., Coffman, C.B., and Mangum, R.W. 2007. Potential long-term benefits of no-tillage and organic cropping systems for grain production and soil improvement. Agronomy Journal 99:1297–1305.Google Scholar
22Cambardella, C.A. and Delate, K. 2008. Carbon and nutrient budgets in the Iowa LTARS – a 10-year comparison. ASA-CSSA-SSSA Annual Meeting Abstracts, October 5–9, 2008, Houston, TX. ASA, Madison, WI.Google Scholar
23Intergovernmental Panel on Climate Change (IPCC). 2007. Assessment Report 4. IPCC, Geneva, Switzerland.Google Scholar
24Shoemaker, R., McGranahan, D., and McBride, W. 2006. Agriculture and Rural Communities Are Resilient to High Energy Costs. USDA-ERS, Amber Waves–April 2006. USDA-ERS, Washington, DC. Available at Web site http://www.ers.usda.gov/AmberWaves/April06/Features/Energy.htm (verified August 5, 2011).Google Scholar
25Hill, H. 2009. Comparing Energy Use in Conventional and Organic Cropping Systems. ATTRA, Fayetteville, AR. Available at Web site http://www.attra.ncat.org/attra-pub/croppingsystems.html (verified August 5, 2011).Google Scholar
26Stolze, M., Piorr, A., Häring, A., and Dabbert, S. 2000. The Environmental Impacts of Organic Farming in Europe. Organic Farming in Europe: Economics and Policy, Volume 6. University of Hohenheim Department of Farm Economics, Stuttgart. http://www.uni-hohenheim.de/i410a/ofeurope/organicfarmingineurope-vol6.pdf (verified August 5, 2011).Google Scholar
27West, T.O. and Marland, G. 2002. A synthesis of carbon sequestration, carbon emissions, and net carbon flux in agriculture: Comparing tillage practices in the United States. Agriculture, Ecosystems and Environment 91:217–232.Google Scholar
28Helsel, Z.R. 2002. Energy in Pesticide Production and Use. Encyclopedia of Pest Management, Vol. II. CRC Press, Boca Raton, FL.Google Scholar
29Ministry of Agriculture, Fisheries and Food in the U.K. 2000. Energy Use in Organic Farming Systems. Available at Web site http://randd.defra.gov.uk/Document.aspx?Document=OF0182_181_FRP.pdf (verified August 5, 2011).Google Scholar
30Lewandrowski, J., Peters, M., Jones, C., House, R., Sperow, M., Eve, M., and Paustian, K. 2004. Economics of Sequestering Carbon in the U.S. Agricultural Sector. USDA-ERS. Technical Bulletin 1909, USDA-ERS, Washington, DC.Google Scholar
31Tawil, N. 2007. The Potential for Carbon Sequestration in the United States. Congressional Budget Office (CBO), Washington, DC. Available at Website http://www.cbo.gov/ftpdocs/86xx/doc8624/09-12-CarbonSequestration.pdf (verified September 15, 2011).Google Scholar
32Müller-Lindenlauf, M. 2009. Organic Agriculture and Carbon Sequestration: Possibilities and Constraints for the Consideration of Organic Agriculture within Carbon Accounting Systems. Natural Resources Management and Environment Department–Food and Agriculture Organization of the United Nations, FAO, Rome, Italy.Google Scholar
33Soil Association. 2009. Soil Carbon and Organic Farming: A Review of the Evidence on the Relationship between Agriculture and Soil Carbon Sequestration, and How Organic Farming Can Contribute to Climate Change Mitigation and Adaptation. Soil Association, Bristol, U.K. Available at Web site http://www.ifoam.org/growing_organic/1_arguments_for_oa/environmental_benefits/pdfs/SA_SoilCarbonandorganicfarming.pdf (verified August 5, 2011).Google Scholar
34Pimentel, D., Hepperly, P., Hanson, J., Douds, D., and Seidel, R. 2005. Environmental, energetic and economic comparisons of organic and conventional farming systems. BioScience 55:573–582.Google Scholar
35Niggli, U., Fliessbach, A., Hepperly, P., and Scialabba, N. 2009. Low Greenhouse Gas Agriculture: Mitigation and Adaptation Potential of Sustainable Farming Systems. FAO, April 2009, Rev. 2–2009. FAO, Rome, Italy.Google Scholar
36Liebig, M.A. and Doran, J.W. 1999. Impact of organic production practices on soil quality indicators. Journal of Environmental Quality 28:1601–1609.Google Scholar
37McBride, W.D. and Greene, C. 2009. The profitability of organic soybean production. Renewable Agriculture and Food Systems 24:276–284.Google Scholar
38USDA-National Agricultural Statistics Service (USDA-NASS). 2006. Crops and Plants: Quick Stats. USDA-NASS, Washington, DC. Available at Web site http://www.nass.usda.gov/Data_and_Statistics/Quick_Stats/index.asp (verified August 5, 2011).Google Scholar
39USDA-Economic Research Service (ERS). 2008. Certified Organic Beans Data File. USDA-ERS, Washington, DC. Available at Website http://www.ers.usda.gov/Data/Organic/ Table 7. Certified organic beans (verified August 5, 2011).Google Scholar
40Lal, R., Kimble, J.M., Follet, R.F., and Cole, C.V. 1998. The Potential of U.S. Cropland to Sequester Carbon and Mitigate the Greenhouse Effect. Sleeping Bear Press, Ann Arbor, MI.Google Scholar
41Environmental Protection Agency (EPA). 2009. Analysis of the American Clean Energy and Security Act of 2009-H.R. 2454 in the 111th Congress. EPA, Washington, DC.Google Scholar
42Congressional Budget Office. 2007. The Potential for Carbon Sequestration in the United States. CBO, Washington, DC.Google Scholar
43Pautsch, G.R., Kurkalova, L.A., Babcock, B.A., and Kling, C.L. 2000. The Efficiency of Sequestering Carbon in Agricultural Soils. Working Paper 00-WP 246. CARD, Iowa State University, Ames, IA.Google Scholar
44Badgley, C., Moghtader, J., Quintero, E., Zakem, E., Chappell, M.J., Avilés-Vázquez, K., Samulon, A., and Perfecto, I. 2007. Organic agriculture and the global food supply. Renewable Agricultural Food System 22:86–108.Google Scholar
45Delate, K., Duffy, M., Chase, C., Holste, A., Friederich, H., and Wantate, N. 2003. An economic comparison of organic and conventional grain crops in a long-term agroecological research (LTAR) site in Iowa. American Journal of Alternative Agriculture 18:1–11.Google Scholar
46Delate, K. and Cambardella, C. 2004. Agroecosystem performance during transition to certified organic grain production. Agronomy Journal 96:1288–1298.Google Scholar
47Porter, P., Huggins, D.R., Perillo, C.A., Quiring, S.R., and Crookston, R.K. 2003. Organic and other management strategies with two- and four-year crop rotations in Minnesota. Agronomy Journal 95:233–244.Google Scholar
48Singerman, A., Hart, C., and Lence, S.H. 2010. Demand for Crop Insurance by Organic Corn and Soybean Producers in Three Major Producing States. Working Paper, Department of Economics, Iowa State University. Paper presented at the Agricultural and Applied Economics Association Annual Meeting, Denver, Colorado, July 25–27, 2010.Google Scholar
49Delate, K., Chase, C., Duffy, M., and Turnbull, R. 2006. Transitioning into organic grain production: An economic perspective. Online. Crop Management doi: 10.1094/CM-2006-1016-01-RS.Google Scholar
50Singerman, A., Lence, S.H., and Kimble-Evans, A. 2010. How Closely Related Are the Prices of Organic and Conventional Corn and Soybean? Working Paper, Department of Economics, Iowa State University. Poster presented at the Agricultural and Applied Economics Association 2010 AAEA, CAES, and WAEA Joint Annual Meeting, Denver, Colorado, July 25–27, 2010.Google Scholar
51Clarkson, L. 2007. Statement of the President of Clarkson Grain Co., Inc. before the U.S. House of Representatives, Agriculture Committee's Subcommittee on Horticulture and Organic Agriculture. Hearing to Review Economic Impacts of Organic Production, Processing, and Marketing of Organic Agricultural Products. 110th Congress, First session, April 18, 2007.Google Scholar
52Chase, C., Delate, K., and Johanns, A. 2011. Organic Crop Production Budgets. Iowa State University, Ames, IA. Available at Web site http://www.extension.iastate.edu/agdm/crops/pdf/a1-18.html (verified August 5, 2011).Google Scholar
53USDA-NRCS [Natural Resources Conservation Service]. 2011. Energy Estimator: Energy Consumption Awareness Tool: Tillage. USDA-NRCS, Washington, DC. Available at Web site www.ecat.sc.egov.usda.gov/Default.aspx (verified August 5, 2011).Google Scholar
54USDA-ERS [Economic Research Service]. 2009. A Preliminary Analysis of the Effects of HR 2454 on the U.S. Agriculture. Office of the Chief Economist, Economic Research Service, USDA, Washington, DC.Google Scholar
55Congressional Budget Office. 2009. H.R. 2454 American Clean Energy and Security Act of 2009, CBO, Washington, DC.Google Scholar